SaaS, while not new, is fairly recent in its boom into popularity. This is largely a result of new technologies and trends facilitating it being truly practical. In the past, there was a limit to how dependent on servers and bandwidth or stable connections a given platform could be. Thankfully, this is changing in the new millennium, and as a result, all kinds of interesting and new things are being experimented with.
However, SaaS marketing tends to be a bit of a touch and go experience, with some companies seeing insurmountable success while others, in the same scenario, fail or at least don’t’ succeed nearly as far. There are numerous debates on what may be the cause of this, even extending as far as bringing fluffy math like chaos theory into the equation. Honestly, this is a bit overkill.
More likely than not, someone is simply missing something, or several things, and it may not be anyone’s fault really. There are in fact a lot of variables to factor in when designing a marketing plan for anything, but SaaS truly takes the taco here. And, when troubleshooting an existing marketing strategy? Oh my.
So, let’s step away from all of the abstract mathematics and trends calculation for just a moment, and look at some SaaS-specific factors that your marketing manager may be missing. Chances are, when you approach him or her with these possibilities, they will have a eureka moment as a result. It’s not their fault, the dynamics of SaaS marketing are truly a beast, and one that has yet to be fully tamed by any of us.
First, let’s look at churn rate, as it’s one of the more problematic hurdles in SaaS. Churn rate is the frequency of lost customers per quanta of time, usually measured on an annual or semi-annual basis. Churn rate is often regarded as a symptom of marketing failure, among other things, but in truth, it may be a stimulus for marketing error as well.
See, if churn rates are high, potential customers will see this, though not directly. They will observe declining interest from existing customers in your service, and this can breed doubt in their minds as to the quality or necessity of your service from their perspective. It also causes disruptions on a fiscal level, which have subtle, causal ripples across all other things, marketing included. So, check your churn rates, and if they seem unacceptable, this may in fact be the cause of marketing failure, rather than a symptom of it.
Second, the cost per lead to reach out to demographics or individual customers can often be directly proportional to the level of marketing failure you are experiencing. Obviously, the more expensive it is to obtain a customer, the more corners will be cut in outreach and obtaining them, which causes the entire strategy to go to pot.
If the cost per lead is particularly high, strategy as a whole will likely need to be rethought, but that is a topic for another day. Just, know that this one’s a big one, and probably more of a sign of trouble than churn rate, if that’s possible.
Finally, let’s look at these two factors and how they may be interacting as a new entity called CAC, or Cost And Churn. Up until now, we’ve looked at these two as discrete causal links to marketing issues, but more often than not, an interplay between them will be the culprit.
If a churn rate is particularly high, and the cost to maintain service and accounts (along with overhead) plays in with high per-lead costs, then the entire strategy will hemorrhage money in the long run. In this situation, it may, again, be best to rethink strategy altogether, but in the event this isn’t possible, there are alternatives.
Isolating the cost of churn will be the first challenge, and then addressing it immediately. This may not be a particularly easy task, but it’s easier than rebuilding the marketing strategies from the ground up. If churn is reduced to acceptable levels, the cost angle may be less of an issue.
If the cost still causes imbalance, the next step will be to find ways to reduce costs without cutting corners, again not an easy thing to do.
In the end, if CAC is the issue, the writing may be on the wall for your current strategy, and your marketing manager is likely to agree. Rebuilding the strategy from the ground up in this scenario may in fact be harder than the other two alternatives, but it has a much higher guarantee of success and resolution.
So, these are three things to bring up with your marketing manager of things are not going according to plan. Chances are they will wonder why it never occurred to them to look at these issues themselves. But, don’t blame them, it’s a mad, mad marketing world out there.